Answer:
To journalize the lump-sum purchase;
Item Value
Land $24,000
Building value $144,000
Equipment value $72,000
Lump-sum value $240,000
Explanation:
<em>Step 1: Determine the total market value of the acquisition</em>
Total market value=land+building+equipment market value
where;
land market value=$25,000
building market value=$150,000
equipment market value=$75,000
replacing;
Total market value=25,000+150,000+75,000=$250,000
<em>Step 2: Determine the proportion of market value that contributes to the lump-sum</em>
Land value=(land market value/total market value)×lump-sum
Land value=(25,000/250,000)×240,000=$24,000
Building value=(Building market value/total market value)×lump-sum
Building value=(150,000/250,000)×240,000=$144,000
Equipment value=(Equipment value/total market value)×lump-sum
Equipment value=(75,000/250,000)×240,000=$72,000
<em>Step 3: Journalize the lump-sum purchase</em>
To journalize the lump-sum purchase;
Item Value
Land $24,000
Building value $144,000
Equipment value $72,000
Lump-sum value $240,000
